Social innovation and financial strengthening of commercial microenterprises in La Maná
DOI:
https://doi.org/10.70577/e0eage68Keywords:
Firm performance; resource-based view; microenterprise resilience; solidarity economy; financial sustainability.Abstract
Commercial microenterprises form a heterogeneous universe that aggregation into broad blocks, such as commerce, tends to obscure in terms of cost structure and financial performance. This article assesses whether the proportion of labor compensation expenditure relative to ordinary revenue, and its relationship with profitability, differs across three commercial subsectors—vehicle and auto parts sales (ISIC G45), wholesale trade (G46), and retail trade (G47)—in the canton of La Maná between 2022 and 2025. Based on a census panel of 763 firm-year observations (277 economic units), built from mandatory financial statements filed with the Superintendency of Companies, Securities and Insurance of Ecuador, a multiple linear regression model of return on assets (ROA) was estimated, including subsector dummy variables, the relative labor expenditure index, and firm size. G45 showed the highest mean ROA (0.075) and the lowest labor expenditure-to-revenue ratio (184.42); G47 displayed the opposite pattern (ROA 0.048; ratio 1,363.29); and G46, accounting for 63.2% of the panel, occupied an intermediate position. However, once relative labor expenditure was controlled for, sectoral membership lost statistical significance in explaining ROA (p > 0.29), indicating that it is labor cost structure, rather than sectoral classification, that accounts for the observed performance differences. These findings call into question the use of standard industrial classifications as a criterion for public policy design in contexts of informality and small scale, and suggest that financial strengthening instruments should instead be guided by the intensity of relative labor cost.
Downloads
References
Abdul-Azeez, O., Ihechere, A. O., & Idemudia, C. (2024). SMEs as catalysts for economic development: Navigating challenges and seizing opportunities in emerging markets. GSC Advanced Research and Reviews, 19(3), 325–335.
Agrawal, A., Gandhi, P., & Khare, P. (2023). Women empowerment through entrepreneurship: Case study of a social entrepreneurial intervention in rural India. International Journal of Organizational Analysis, 31(4), 1122–1142. https://doi.org/10.1108/IJOA-03-2021-2659
Aguilar-Galeano, E., Diaz-Ariza, D., & García-Castiblanco, C. (2026). Social innovation strategies to improve agroecological product marketing: A case study in rural Colombia. Journal of Agriculture, Food Systems, and Community Development. https://doi.org/10.5304/jafscd.2026.152.003
Agyapong, F., Agyapong, A., & Poku, K. (2017). Nexus between social capital and performance of micro and small firms in an emerging economy: The mediating role of innovation. Cogent Business & Management, 4, 1–17. https://doi.org/10.1080/23311975.2017.1309784
Antunes, J., & Franco, M. (2025). The contribution of cooperation networks to service innovation in microenterprises: A management perspective. Innovation: The European Journal of Social Science Research, 38, 1559–1583. https://doi.org/10.1080/13511610.2025.2461998
Ashta, A., Couchoro, M., & Musa, A. (2014). Dialectic evolution through the social innovation process: From microcredit to microfinance. Journal of Innovation and Entrepreneurship, 3, 1–23. https://doi.org/10.1186/2192-5372-3-4
Bahta, D., Yun, J., Islam, R., & Ashfaq, M. (2020). Corporate social responsibility, innovation capability and firm performance: Evidence from SMEs. Social Responsibility Journal, 17(6), 801–822. https://doi.org/10.1108/srj-12-2019-0401
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Cajaiba-Santana, G. (2014). Social innovation: Moving the field forward. A conceptual framework. Technological Forecasting and Social Change, 82, 42–51. https://doi.org/10.1016/j.techfore.2013.05.008
Chen, W.-H., Chen, S., Lin, Y.-C., Chen, C.-L., Ng, W.-K., Ding, Y., Shih, Y.-S., & Chen, H.-N. (2025). Achieving social innovation in the digital age: A case study of microbusiness. International Journal of Innovation Studies, 9(1), 16–29. https://doi.org/10.1016/j.ijis.2024.12.003
Chen, X. (2021). Immigrant-owned small businesses' participation in diaspora philanthropy: A case study during the COVID-19 outbreak. New England Journal of Entrepreneurship, 24(2), 105–121. https://doi.org/10.1108/NEJE-08-2020-0033
Cortes, A. F., & Lee, Y. (2021). Social entrepreneurship in SMEs: A note on three essential questions. New England Journal of Entrepreneurship, 24(2), 62–78. https://doi.org/10.1108/NEJE-03-2021-0014
De Sordi, J. O., de Paulo, W. L., Jorge, C. F. B., Hashimoto, M., & Meireles, M. (2024). Exploring organisational improvisation through the experience of small business managers. Technology Analysis and Strategic Management, 36(10), 2592–2608. https://doi.org/10.1080/09537325.2022.2156335
Dionisio, M. (2024). Analyzing transformational role of black women entrepreneurs in Brazilian beauty sector. Social Enterprise Journal, 20(5), 750–765. https://doi.org/10.1108/SEJ-12-2023-0154
Djebali, Z., Di Domenico, M., & Saunders, M. N. K. (2023). Starting up, not slowing down: Social entrepreneurial intentions in later working-life. International Small Business Journal: Researching Entrepreneurship, 41(3), 239–268. https://doi.org/10.1177/02662426221093570
Gracia, J., Hernández, V., & Ramírez, H. (2021). La innovación social en las PYMES como estrategia para generar una ventaja competitiva en el mercado empresarial. Estudios de Administración y Tecnología, 8(15), 1–8. https://doi.org/10.29057/esat.v8i15.6678
Kato, A. (2021). Local government as a platform for altruistic microbusiness: A case study of a children's cafeteria in Japan. Journal of the International Council for Small Business, 2(1), 55–66. https://doi.org/10.1080/26437015.2020.1851116
Keelson, S. A., Cúg, J., Amoah, J., Petráková, Z., Addo, J. O., & Jibril, A. B. (2024). The influence of market competition on SMEs' performance in emerging economies: Does process innovation moderate the relationship? Economies, 12(11), Article 282. https://doi.org/10.3390/economies12110282
Labanauskaite, D., & Rozhenko, O. (2024). Stimulating the social responsibility of small businesses: Government policy and social innovations. World Journal of Entrepreneurship, Management and Sustainable Development, 20(3–4), 213–228. https://doi.org/10.47556/J.WJEMSD.20.3-4.2024.2
Lans, T., Lubberink, R., Ploum, L., Ammann, M., & Gondwe, S. (2021). Entrepreneurial learning at the boundary: How to learn from a local cheese maker. Entrepreneurship Education and Pedagogy, 4(3), 527–548. https://doi.org/10.1177/2515127420925015
Laorden, N. L., Sarmiento, J. M. P., Romo, G. D. A., Acuña, T. R., & Acopiado, I. M. A. (2022). Impact of supply chain disruptions during the COVID-19 pandemic to micro, small and medium enterprises in Davao Region, Philippines. Journal of Asia Business Studies, 16(3), 568–586. https://doi.org/10.1108/JABS-05-2021-0216
Le, D. V., Le, H. T. T., Pham, T. T., & Vo, L. V. (2023). Innovation and SMEs performance: Evidence from Vietnam. Applied Economic Analysis, 31(92), 90–108. https://doi.org/10.1108/AEA-04-2022-0121
Maksum, I., Rahayu, A., & Kusumawardhani, D. (2020). A social enterprise approach to empowering micro, small and medium enterprises (SMEs) in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 6(3), 50. https://doi.org/10.3390/joitmc6030050
Matekele, C. K., Rutatola, P. P., & Imori, M. M. (2024). Determinants of farmers' intentions to seek agricultural value chain financing in Tanzania. Cogent Business and Management, 11(1), Article 2312964. https://doi.org/10.1080/23311975.2024.2312964
Miah, M. T., Aiupova, N., Erdei-Gally, S., & Fekete-Farkas, M. (2025). Digital entrepreneurship ecosystems: Then vs. now—A future perspectives. Digital Business, 5(1), Article 100110. https://doi.org/10.1016/j.digbus.2025.100110
Misrofingah, M., Fatoni, M., Tarigan, B., & Riyanto, A. (2025). Measuring business social innovation and the effectiveness of corporate social responsibility programs in local communities. Jurnal Ilmu Sosial dan Humaniora, 14(2). https://doi.org/10.23887/jish.v14i2.96897
Morea, D., Tani, M., Mazzitelli, A., & Basile, G. (2024). New business model and local governance in supporting social and environmental solutions: A social network analysis. Socio-Economic Planning Sciences, 94, Article 101945. https://doi.org/10.1016/j.seps.2024.101945
Mulloth, B., & Rumi, S. (2022). Challenges to measuring social value creation through social impact assessments: The case of RVA Works. Journal of Small Business and Enterprise Development, 29(4), 528–549. https://doi.org/10.1108/JSBED-06-2021-0219
Ordoñez, L., & Calvache, J. (2023). La responsabilidad social empresarial como eje de fortalecimiento en la competitividad de la microempresa. Academia & Derecho, 14(25). https://doi.org/10.18041/2215-8944/academia.25.10584
Pandey, D. L., Uprety, S. K., & Risal, N. (2023). Personality traits and their impact on the social entrepreneurial intentions of management students. Journal of Innovation and Entrepreneurship, 12(1), Article 42. https://doi.org/10.1186/s13731-023-00342-8
Putranto, A. (2025). Innovative and collaborative strategies to enhance the competitiveness of MSMEs in the digital era. Journal of Comprehensive Science, 4(6). https://doi.org/10.59188/jcs.v4i6.3396
Sarwar, Z., Khan, M., Yang, Z., Khan, A., Haseeb, M., & Sarwar, A. (2021). An investigation of entrepreneurial SMEs' network capability and social capital to accomplish innovativeness. SAGE Open, 11(3). https://doi.org/10.1177/21582440211036089
Siqueira, E. H. S., Fischer, B. B., Bin, A., & Kickul, J. (2023). Entrepreneurial ecosystems' readiness towards knowledge-intensive sustainable entrepreneurship: Evidence from Brazil. Technovation, 126, Article 102820. https://doi.org/10.1016/j.technovation.2023.102820
Sottini, A., Ciambotti, G., & Littlewood, D. (2022). Engaging symbiotic ecosystems to build community centred business models for the BoP: Evidence from small social enterprises in East Africa. International Small Business Journal: Researching Entrepreneurship, 40(8), 935–965. https://doi.org/10.1177/02662426211059778
Susanto, C., Al Habsy, T., Wilopo, & Abdillah, Y. (2021). The influence of social entrepreneurship on the organizational learning, partnership, competitive advantages, and business performance. Human Systems Management, 40(3), 435–452. https://doi.org/10.3233/HSM-190751
Tomasella, B., Ali, A., & Gill, D. (2024). Hospitality that cares: A qualitative investigation into small foodservice businesses' social responsibility. Current Issues in Tourism, 27(12), 1853–1869. https://doi.org/10.1080/13683500.2023.2214849
Valero, J. N., Saitgalina, M., & Black, R. A. (2024). Understanding the nature of non-profit incubators with other sector incubators in the founding of social change organisations by social entrepreneurs. Journal of Social Entrepreneurship, 15(2), 565–584. https://doi.org/10.1080/19420676.2021.1977975
Verjel, D., Vila, M., & Vega, C. (2025). Development of microbusinesses within the framework of the solidarity economy: An international approach for the food and beverage sector. Southern Perspective / Perspectiva Austral. https://doi.org/10.56294/pa202599
Xin, L., Tang, F., Zhang, S., & Pan, Z. (2020). Social capital and sustainable innovation in small businesses: Investigating the role of absorptive capacity, marketing capability and organizational learning. Sustainability, 12(9), 3759. https://doi.org/10.3390/su12093759
Zhang, S., Zhu, C., Li, X., Yu, X., & Fang, Q. (2022). Sectoral heterogeneity, industrial structure transformation, and changes in total labor income share. Technological Forecasting and Social Change, 176, Article 121509. https://doi.org/10.1016/j.techfore.2022.121509
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Leysli Nicole Mera Arias , Kevin Alexander Peñafiel Mora , Eduardo Fabricio Cabrera Toscano , Gloria Evelina Pazmiño Cano (Autor/a)
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
